Passenger vehicle sales stagnate in FY25 amid waning demand

NEW DELHI: After three years of blockbuster growth, passenger vehicle (PV) sales have come under pressure in FY25. Due to waning pent-up demand and lack of interest shown by new consumers, dealer showrooms are filled with inventory of unsold vehicles despite steep discounts and promotional schemes.

“PV wholesale volumes grew 3% in Q1FY25 on a YoY basis, but retail volumes fell 7% amid factors like heat conditions, implementation of model code of conduct and the General elections impacting retail footfalls. While the underlying demand drivers remain supportive, ICRA expects domestic PV sales volume growth to fall to 3-6% in FY25 on waning replacement demand and effects of a high base,” said Srikumar Krishnamurthy, senior VP & co-Group head – corporate ratings, ICRA.

PV industry saw sales of 42.3 lakh units in FY24 as against 38.9 lakh units sold in FY23, up 8.7% YoY. Puneet Gupta, director, S&P Global Mobility, said while the industry is expected to grow in FY25 over a high base, absence of pent-up demand, geopolitical uncertainties and delay in rate cut by the RBI remain concerns.